The Chair Company Produces Two Modular Types of Chairs: One

question 236

Essay

The Chair Company produces two modular types of chairs: one for the residential market,and the other for the office market.Budgeted and actual operating data for the year 2018 are:
$$\begin{array} { l r r r } \text { Static Budget } & \text { Residential } & \text { Office } & \text { Total } \\\text { Number of chairs sold } & 260000 & 140000 & 400000 \\\text { Contribution margin } & \$ 26000000 & \$ 11200000 & \$ 37200000 \\& & & \\\text { Actual Results } & \text { Residential } & \text { Office } & \text { Total } \\\hline \text { Number of chairs sold } & 248400 & 165600 & 414000 \\\text { Contribution margin } & \$ 22356000 & \$ 13248000 & \$ 35604000\end{array}$$
During 2017,an office products research firm estimated the industry volume for residential and office chairs of the type sold by the Chair Company to be 2 400 000.Actual industry volume for the year 2018 was only 2 200 000 chairs.
Required:
Calculate the following variances in terms of contribution margin:
a.Calculate the total static-budget variance,the total flexible-budget variance,and the total sales-volume variance.
b.Calculate the sale-mix variance and the sales-quantity variance by type of chair,and in total.
c.Calculate the market-share variance and market-size variance.
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Understand and define the concept of mutually exclusive events in probability.

Understand and define the concept of independent events in probability.

Calculate the probability of the intersection of two events.

Calculate the conditional probability of one event given another.

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Definitions:

Primary Reinforcer

A stimulus that satisfies a basic biological need and inherently encourages a particular behavior without prior learning or conditioning.

Money

A medium of exchange in the form of coins and banknotes; used to purchase goods and services.

Reinforcement Deprivation

A condition where the absence of reinforcing stimuli leads to a decrease in the occurrence of a particular behavior.

Reinforcer

Any stimulus that strengthens or increases the probability of a specific response or behavior by providing a consequence an individual finds rewarding.